A partisan divide pitting Republicans against Democrats on the question of Internet regulation appears to be deepening.

A Republican-controlled House Energy and Commerce subcommittee on Wednesday defeated a proposal that would have levied extensive regulations on broadband providers and forcibly prevented them from offering higher-speed video services to partners or affiliates.

By an 8-to-23 margin, the committee members rejected a Democratic-backed "Net neutrality" amendment to a current piece of telecommunications legislation. The amendment had attracted support from companies including Amazon.com, eBay, Google, Microsoft and Yahoo, and their chief executives wrote a last-minute letter to the committee on Wednesday saying such a change to the legislation was "critical."

Before the vote, amendment sponsor Rep. Ed Markey, a Massachusetts Democrat, assailed his Republican colleagues. "We're about to break with the entire history of the Internet," Markey said. "Everyone should understand that."

This philosophical rift extends beyond the precise wording of the telecommunications legislation. It centers on whether broadband providers will be free to design their networks as they see fit and enjoy the latitude to prioritize certain types of traffic--such as streaming video--over others. (In an interview last week with CNET News.com, Verizon Chief Technology Officer Mark Wegleitner said prioritization is necessary to make such services economically viable.)

After a day of debate, the committee went on to vote 27-4 in favor of approving the final bill--minus the Democrats' amendment--sending it onward to full committee consideration, expected in late April. The vote on the amendment itself did not occur strictly along party lines, with one Republican voting in favor and four Democrats voting against it.

"This is not Chicken Little, the sky is not falling, we're not going to change the direction of the axis of the earth on this vote," said Rep. John Shimkus, an Illinois Republican. He said overregulatory Net neutrality provisions would amount to picking winners and losers in the marketplace and discourage investment in faster connections that will benefit consumers.

Last week, Energy and Commerce Committee Chairman Joe Barton said: "Before we get too far down the road, I want to let the market kind of sort itself out, and I'm not convinced that we really have a problem with Net neutrality."

Barton and other Republican leaders of the House panel did, however, offer some modest changes to a telecommunications bill in response to concerns from Internet and software companies.

Their replacement bill would require the Federal Communications Commission to vet all complaints of violations of Net neutrality principles within 90 days. It gave the FCC the power to levy fines of up to $500,000 per violation.

It also contained explicit language denying the FCC the authority to make new rules on Net neutrality. Democrats charged that lack of enforcement power would mean the FCC would be unable to deal with the topic flexibly.

Rep. Charles Pickering, a Mississippi Republican, backed that less-regulatory approach, saying that a "case-by-case adjudicatory process" is the best way to address Net neutrality concerns while ensuring competition in the marketplace.

It said that any content provider must be awarded bandwidth "with equivalent or better capability than the provider extends to itself or affiliated parties, and without the imposition of any charge." That would likely prohibit any plans by Verizon or other former Bell companies to offer their own video services that would be given priority over other traffic (video is bandwidth-intensive and intolerant of network delays).

"I think this walled garden approach that many network providers would like to create would fundamentally change the way the Internet works and undermine the power of the Net as a force of innovation and change," said Rep. Anna Eshoo, a California Democrat.

Markey warned: '"There is a fundamental choice. It's the choice between the bottleneck designs of a...small handful of very large companies and the dreams and innovations of thousands of online companies and innovators."

By "very large companies," Markey was not referring to Microsoft, which has a market value of $287 billion, but its much smaller political rival Verizon, which has a market value of $101 billion and has opposed Net neutrality mandates. Markey did not appear to be referring to Google, which has a value of $121 billion and has been lobbying on behalf of federal regulations, but to AT&T, which has a value of $105 billion and has opposed them.

A CNET News.com report published last week, however, showed that the Internet industry is being outspent in Washington by more than a 3-to-1 margin.

AT&T, Comcast, Time Warner, and Verizon spent $230.9 million on politicians from 1998 until the present, while Amazon, eBay, Google, Microsoft and Yahoo spent only a combined $71.2 million. (Those figures include lobbying expenditures, individual contributions, political action committees and soft money.)

In the last week, the Net neutrality debate in Washington has spread beyond the circles of lobbyists for telecommunications and e-commerce companies.

A network of conservative and free-market groups has begun warning Congress that Net neutrality regulations are not consistent with Republican laissez-faire principles and protection of private-property rights.

The American Conservative Union, the National Taxpayers Union, former House Majority Leader Dick Armey's FreedomWorks, and Citizens Against Government Waste were among the signers of a letter Friday that said the Democrat-backed proposal would let the FCC "exercise complete discretion over the Internet."

"At the very least," the letter cautioned, "the vague terminology could lead to an explosion of litigation, which would, in turn, deter capital investments in technology and thwart the evolution of the Internet."

Republican insider Grover Norquist of Americans for Tax Reform, which opposes tax hikes, added in a letter on Tuesday that "a network neutrality provision in any form would begin down the dangerous path of Internet regulation.

About the author

Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
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